How to protect yourself from rogue Forex brokers

A forex scam occurs when a forex broker convinces traders that they can make extraordinary profits in the forex market. There are many scams, but the most common include:

  • The broker who runs a fake online brokerage agency, accepts deposits and runs away with your money
  • The broker that charges excessive fees to trade
  • The broker that charges excessive fees processes bank transfers when you request a withdrawal of your money
  • The broker takes an inordinate amount of time to issue you a payment when you request a withdrawal of funds.
  • The broker encourages excessive trading
  • The broker manipulates stop loss orders or ignores buy or sell orders to maximize the broker’s profit.

Before choosing a forex broker, you need to do your research. It can be very helpful to take a look at various online broker reviews and guides. It can also be a valuable exercise to check out some of the online forums for broker trader reviews, as these reviews are often extremely unbiased and unrestricted. You should check out several of these forums to get a complete picture of the online broker being reviewed. Also, keep in mind that some reviews do not reflect a typical trader’s experience with the broker and a negative experience may be due to the broker’s lack of trading experience or simply poor or aggressive decision making. Try to find information about the reviewer’s business experience.

How do you know if a trader is really scammed or just inexperienced?

When reading trader reviews and trader posts on online forums, it is a good idea to keep in mind that some negative reviews are due more to the trader having little trading experience and less to an online forex broker providing poor service. or product. In addition to the tips listed above, there are a few ways to tell if a trader is inexperienced. Take a close look at what the forum post says about a particular trader.

An inexperienced trader may leave a spot position open beyond one day and therefore pay to “reset” his account for the full offer / margin price. An inexperienced trader can also use a 0.5-2% margin (instead of a safer 10%) to try to make a huge profit. Inexperienced traders may also be more likely to trade with a broker that charges extremely small spreads or very low commissions, but runs a trading desk and takes the trader for a hefty sum on each trade; Experienced traders are less likely to trade with these types of brokers. . Lastly, inexperienced traders are more likely to write about problems with their mini accounts and complain about losing their first deposit of $ 50 to $ 200. More experienced traders are likely to open larger accounts and trade larger amounts. .

How to protect yourself as a forex trader

There are some important points to remember before you start trading. Make sure you read the fine print before investing and understand the limits of what a broker offers. What commissions or spreads is the broker going to charge on a trade? Are there any hidden costs or fees like settlement fees, bank transfer, account maintenance fees, etc.? Check your trades to see the waiting time for the execution of the order. See how long it takes to get paid when you decide to settle your account. If your broker does not allow you to take your investments out immediately, consider it a warning and do not invest with them.

Unfortunately, forex scams are a reality, so do your research before opening an account with an online forex broker. Find the right broker for you by reading online reviews and online user forums. Make sure you educate yourself on the brokers’ trading terms and conditions – read the fine print. When in doubt, contact the broker’s customer service. If you are new to online forex trading, open a practice account before trading real money. If you find a forex scam, please post a detailed experience online for others to read so no one else gets burned.

Leave a Reply

Your email address will not be published. Required fields are marked *